Our diligent eyes on Ottawa: what are they planning?
We have years of experience assisting clients with tax issues. Whether income tax, HST, GST, PST, Property Transfer Tax or or “quasi” taxes like Probate Fees and CPP, this permeates everything. The biggest barrier to most business transactions (or maybe just most transactions. . .) is tax so we have to understand it. We do not prepare or file general tax returns- although we do frequently file forms or returns that pertain to particular transactions- or suggest ways to expense your dog food. We do, however, devise plans to fit the circumstances and we always consider the tax implications of transactions or structures involving our clients to minimize the costs. We have the experience and maintain the resources to develop and implement sound strategies.
Some issues we deal with frequently are:
Business Succession – Sometimes it is better to sell your business before retiring but you may prefer to pass it on to the next generation. There are many strategies for doing this and the decision of which to choose is usually tax-driven but also depends on whether you consider yourself to be selling the business or giving it away. Maybe it is your most valuable asset, so how can you give it to one child and still be fair to the others? We will help you devise a plan, work with your advisors to devise one or implement a reasonable plan developed by someone else. You may wish to do an “estate freeze”, create a family trust to hold new shares or find a way to gift what you have to the next generation. Every situation is unique and we never stop learning.
Marital Breakdown – Dividing assets when a relationship ends is never a good thing but there are better and worse ways to go about it. Is there an opportunity to use the capital gains exemption and pay pre-tax money to produce tax-free proceeds? Would it be better to use another company to divide corporate assets or redeem shares over time? What about claiming deductions for spousal support payments? Is there a better way to divide the family home (or ranch) so that the tax, at least, is less of a burden? There is a tendency for ex-partners to fight to the last penny (harder now that they’ve stopped producing pennies but still apparently worth a fight) but deals are made because they are mutually advantageous and saving tax for both sides can create a huge mutual advantage.
Death Taxes – No, they don’t stop at death. In fact, they all tend to hit at once and, if you’re not careful, double up. It may be too late to fix a will or settle a trust but there are graduated rate estates, pipelines, bumps and 164(6) reorganizations to consider. Hopefully the deceased has a good estate plan in place but there is always more that can be done.
Business Startup – Starting a business is fairly easy but there are always better ways to do things, and traps if you do them wrong. For instance, there are often tax advantages to incorporating but companies need assets in order to function, and transferring assets to a company (or a partnership for that matter) triggers income tax, GST and possibly PST or Property Transfer Tax. In most cases these can be avoided but avoiding them and keeping other options open- income sprinkling among other family members in a TOSI world, qualifying for the small business tax rate, maintaining access to the capital gains exemption, etc.- require advance planning. Decisions become easier if you make them all the time but most people don’t start a new business every week. We do